The paper compares different European societies by highlighting structural differences and
developments. Specifically, within the labour market.
It begins with an introduction of the different labour market theories. The neo classical theory states
that the labour market is identical to other markets and wages are determined by supply and
demand. The human capital theory emphasizes on the time and money invested in personal
attributes and knowledge. These investments improve the productivity and thus must be reflected in
the wages. The social scientific labour market theory states that the labour market cannot be
compared to a commodity market. Each segment within the market is regulated by external parties
and full wage flexibility doesn’t exist. At the same time there is an interdependency between the
labour market and commodity markets.
This introduction is followed by an overview of the productivity and living standards across Europe.
By referring to the GDP in PPS between 1995 and 2008, the Paper highlights that the disparity
between western and eastern Europe is considerable, yet continuously decreasing.
During the introduction, the paper outlined that all theories agree that the labour market is always
changing. These changes can be measured by indicators such as labour market participation. This
indicator reflects the social integration as well as the living standards of a certain age, class or
gender. Regardless of the country, the participation is higher among men than women. However,
the gap between men and women is closing. Overall, an Increase in labour market participation can
be observed. Regional differences between western and eastern Europe are also reflected here.
Another labour market indicator is the unemployment. Like the labour market participation, the
Unemployment is greater among women than men. At the same time, it is declining faster than the
Unemployment among men.